Summary of Too Big to Fail

The Hazards of Bank Bailouts

Brookings Institution Press, more...

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Too Big to Fail book summary
A thorough exploration and profound reflection on the risks of the “too big to fail” doctrine

Rating

9 Overall

10 Applicability

8 Innovation

5 Style

Recommendation

In this clearly prophetic book, Gary H. Stern and Ron J. Feldman examine the “too big to fail” doctrine, and show how policymakers made the financial system riskier by implicitly promising to bail out the biggest banking institutions. In the wake of the global financial crisis in which several major institutions failed in 2008, getAbstract welcomes this reissued, lucid assessment of one of the most perplexing, perverse policies in financial regulation, the idea that some institutions are too big to fail. Former Federal Reserve Chairman Paul A. Volcker’s foreword helps sharpen the book’s focus, and the authors’ advocacy for an end to bailouts is quite persuasive. This book is recommended reading for anyone seriously interested in understanding the calculus of financial policymakers, financial system risk, and the tilted playing field that benefits huge, risky banks and their shareholders.

In this summary, you will learn

  • What the “too big to fail” doctrine means
  • Why this approach increases systemic risk
  • How financial policymakers can fix this issue
 

Summary

Foreword by Paul A. Volcker
Whether bank failures caused the Great Depression, or vice versa, is still unclear. However, the fact that both occurred together has persuaded policymakers that bank failures have potentially disastrous consequences for the economy. For years leading up to ...
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About the Authors

Gary H. Stern is president and CEO of the Federal Reserve Bank of Minneapolis, where Ron J. Feldman is senior vice president.


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    Malu Intern FinOps 2 years ago
    A great prophet.
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    Robert Sharp 4 years ago
    Published 4 years before the meltdown. I can only say, WOW.

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